Aaaah Sunday… a day of leisure and relaxation or church and an afternoon of football games. No matter what you do on Sunday to be truly frugal the Sunday paper should be part of your routine. Why? The Sunday paper has coupons and sales papers. Using coupons on items that you regularly use or new products that you want to try is a great way to save money for other purposes. Use coupons on items that you stock upon such as personal hygiene items, paper goods, or cleaning products. Non-perishable items always seem to cost more when you really need them, so plan ahead, if you can. When those items go on sale, stock up so when you run out you won’t have to pay exorbitant prices on your favorite brand.

Also, sales papers from electronics, office supply, and clothing stores may give you a tip on prices for gifts you might want to buy for any holidays. This doesn’t mean that you have to buy the items, but by looking at the papers when you do need to purchase a certain item, then you have an idea what the item will cost and can budget for it. A really hot item like a toy, or game or accessory may be on sale around Halloween and increase in price so start planning now.

What are you waiting for? Get out there and clip some coupons!

You may know what your favorite credit card is or know the numbers by heart. Not a problem, the big question is: do you really know how much you take home every month? Really, honestly? How much do you take home? Of course if you have figured out your annual gross salary or your weekly or your biweekly salary. Then there are taxes and other deductions. So how much are you really taking home?

Let’s say you make $50,000 a year. Your gross earnings would be roughly $1923 based on 26 pay periods a year.. GROSS, not net. Ouch! Then there are the deductions: federal and state taxes, social security and a percentage of health insurance. These may total about 28% of your income in total. If you wanted to be proactive and save money in an employer’s 401(k) program then you have even less to take home. Although the 401(K) will benefit you in the future, it is still less money you take home. Fortunately, though you are not taxed on certain contributions that are made directly from your check. A $200 401(k) contribution really only costs you a percentage of the $200 because your taxable income is reduced by the contribution you make.

 BUT… that doesn’t help you now. After the deductions that you have your $1923 gross may suddenly look more like $1425 or less. That’s not so bad is it? So $1425 twice a month is still nothing to sneeze at $2850 can be manageable.

Where did my $50000 go? Fifty thousand dollars gross spends differently than fifty thousand dollars net. A net income of $50000 would be more like a gross income of $75000 or more. No matter how much you make in order to be able to have some left over means that you cannot spend all of your money.

Sounds simple… if you made $300 a day net and spent $325 you can see that you are spending more than you are earning. Could you live off of sixty percent of it – $180? Would you save 20% = $60? What about the other twenty percent … $60? You could become a philanthropist, tithe, give to a political campaign or open small college funds for all the children you know. Determine what you earn then you can figure out what you spend and what your needs really are.

 Do it… figure out how much money you actually take home monthly, or biweekly or weekly. Then figure out how much of that money has to pay for the necessities in life. The money that you have left over is what you have to spend for the fun stuff. There may not be as much money for the fun stuff when you do the math. That’s when you see that there is a great disparity between your gross and your net earnings. Have you included any money for your future?

Get a paper bag because it may make you hyperventilate once you see that you aren’t bringing home as much as you thought you were. You can still enjoy things in life, it may mean saving for a big ticket item instead of charging it. Take a serious look at your income before you let any more go.

Credit cards are not evil.

So, wait yesterday I said that cash was not evil. Now today you are saying that credit cards are not evil. How can you say that? Having a healthy relationship with money and credit is good.

The problem with credit cards is that too many times they are pawns in drowning people in debt. Not all debt is bad – a mortgage that you can afford is good debt. [Housing should account for about one third of your gross income.] New shoes for a party that you will probably wear only once is not good debt. Buying food in restaurants when you don’t have the cash is not a good form of debt. If you do not have the cash to pay for it, you will be stuck paying interest on the card.

Credit cards, even the ones with high interest rates or fees to carry them can be used wisely. Here’s the secret…

Shhh…. don’t use all of your available credit and pay off the balance before the due date.

Let’s say you opened a store card because you were tempted to buy a new television or dryer or computer, etc.. The promotional offer also gives you an extra 10% off your purchase and you have to pay all of the balance within six months with a minimum payment. No sweat. You may not be able to pay the total in one month or two; but could you easily pay off the total in six months or less?

To do this you have to pay:

ON TIME!

More than the minimum amount!

Diligently!

And…

Pay off the balance before the promotional term ends!

Being frugal doesn’t mean that you have to do without everything. There are some things that you want and don’t want to go deep into debt to buy them. I’ve been there before… to get an extra discount on a piece of luggage, I opened a store account and got an additional discount. I quickly did the math. By opening the store card I did have another line of credit, but I knew I had the money to pay for the item, which was considerably less because I used credit wisely.

Using credit wisely is important. If I had bought more than I intended to buy and was unable to pay for the purchase by the time the bill came that would have been a bad use of credit. I was taking the opportunity to get a greater discount on something that I went to buy. I was not making an impulse buy. Opening a new store card just because you were asked isn’t always a good move. If you have too many new cards open within a short period of time, your credit rating suffers. Using the credit cards you have wisely by paying on time, and in full so you avoid fees helps your credit score and your wallet. Wouldn’t you rather use the $39 late fee you have to pay on a credit card for something fun, stash it away in an emergency fund or investment account.

Credit cards are not evil if you use them wisely. In fact they can be great tools to help improve your relationship with money.

          Cash is not evil. There I have said it.

          Really though, how many of us make daily purchases like coffee, groceries, and miscellaneous items with cash? The commercials that irritate me the most are those that show people making purchases for fast food on a credit card. When I was in college I decided that I was not going to buy food with credit cards. I had a friend freshman year at Loyola who ran up about $25,000 in debt. This was in the late 80s. She didn’t have parents who could bail her out and she returned some of the items that she had purchased but that really didn’t help lessen her burden of debt.

          Whenever my friends and I went out to get food, we would buy what we could afford. Some had credit and some didn’t. Those who didn’t, thought the novelty of charging food would be so grown up. I didn’t. I too was lured in by a free t-shirt or bag on campus and signed up, but whatever I bought I paid for. I made sure that I had the money by the time the bill came or I didn’t but the item. This also helped me learn to use credit wisely.

          Food is something that I could pay for. I have only used a credit card for groceries less than a handful of times – mainly because the purchases I was making were gourmet items from a specialty store and I had budgeted for the items out of my Christmas fund.

          The reason that the commercials irritate me so much is that most people do not pay off their credit card bills in full at the end of the month. I was raised that way, actually my parents are more cash users than I am. I use a credit card when I don’t want to carry cash or want the rewards point on my favorite card. [BUT I pay the balance in full every month.] Food is a temporary thing – not something that I want to charge. What difference does it make if I am going to pay it all off at the end of the month anyway? None really but it’s a position that I stand by. Plus, if the purchase is less than $10 or $20 it can be paid for out of the cash I carry. Since the majority of credit cardholders carry a balance, wouldn’t it be easier in the long run to make that extra effort and pay cash for your lunch or magazine or coffee?

          Try it. Carry a reasonable amount of cash with you for the week. Use this for those small mindless purchases that make during the week. If you want to save money that’s cool; but it doesn’t mean you have to do without everything. Paying cash for certain things will make you think about what you are buying and whether or not you really need the item. If you decide on $100 or $200 a week for incidental expenses try to stick to it. Then if you do carry a balance on your credit card you are not paying 14% more for the paperback or Mexican dinner you bought.

          Why cash and not a debit card? When you use cash you physically have to touch the money and count it out. When you are swiping a card you are detached from the amount you are spending. Swipe after swipe after swipe, unless you have great will power or mathematical prowess, you still can lose track of your spending. Try it when you are at the store next time, which feels more real, using cash or swiping a card? No matter how you try to justify it, a debit and credit cards remove you from being in touch with your money and having greater power over your finances.